Market/Customer Segmentation

Different people have different needs/expectations – no surprises there. The challenge of the marketeer is to provide their customers and prospects with a product/service that matches (or exceeds) their needs/expectations.

Segmentation is a powerful quantitative technique that identifies similar groups of people (based on their individual needs/expectations) and reveals key motivations and drivers for each group.

There are several ways of identifying different segments. Common sense is often the best way (for instance, regular customers vs occasional vs lapsed; High income vs medium vs low; etc).

However, if you do not already know what segments you want to study, a statistical technique called “cluster analysis” can be used. Using data for any group of questions that you choose, cluster analysis looks for “clusters” of people with similar combinations of answers. In other words, cluster analysis uses the data itself to identify cohesive clusters/segments and so is often able to provide insight that may differ from, or even contradict, preconceived notions.

Once the segments have been defined, ownership, usage and attitudes are three of the most interesting dimensions to analyse. Segmentation Analysis is, therefore, often conducted on “U&A” data and often identifies major opportunities (and/or failings) of both a strategic and tactical nature.